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Posts Tagged ‘Homeowners Association’

I posted this announcement in my website last October 2011. But, I forgot to post it here.

The HLURB approved last June 24, 2011 theIMPLEMENTING RULES & REGULATIONS of Republic Act No. 9904, otherwise known as the “Magna Carta for Homeowners and Homeowners Association.” For a copy, click on the link above.

To read other articles that I have published recently, kindly go to the REALTTORNEY website.

OG emailed me a very interesting question on my birthday last Wednesday. She asked whether membership in a HOA is still voluntary under RA 9904?

Apparently, like most people living in a gated community (village or subdivision) that is not well maintained and poorly managed, OG does not know where her monthly dues are being spent. She has great mistrust towards the members of the Board of Directors. And if she can have it her way, then she does not want to be a part of the HOA and just pay for the benefit she shares with the HOA, like the operation of street lights. In her opinion, their “subdivision is far from looking like a private subdivision and [she] believe that basic needs like street lights, road improvement, garbage collection must be shouldered by the barangay”

OG points out that Section 5 of HLURB Resolution No. 770, Series of 2004 (Framework for Governance of Homeowners Association) provides the following:

“Sec. 5. Nature of Membership. – Membership in an Association should be voluntary unless –
a. the same is required under the deed restrictions annotated on the title of the property;
b. is stipulated under the contract for the purchase of a lot in the subdivision project; or
c. is a requirement for an award under a Community Mortgage Program project or similar tenurial arrangement.”

Does the passage of RA 9904 change the nature of the membership in HOAs as indicated in the above-quoted Board Resolution of the HLURB?

To answer this query, we should first look at the basic law that protects the rights of buyers in a subdivision project — Presidential Decree No. 957, otherwise known as “The Subdivision and Condominium Buyers’ Protective Decree.” Section 30 of P.D. 957 introduced us to the concept of “homeowners’ association.” It provides the following:

“Sec. 30. Organization of Homeowners Association. – The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development.”

Notice the use of the word “shall”. This connotes that the developer of a subdivision project is mandated by law to initiate the formation of a homeowners’ association from “among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development.” Note, not only are the lot (or house and lot) buyers to be organized but also RESIDENTS OF THE PROJECT as well. This is why, under certain conditions, lessees are allowed to become members of the HOA. (See Section 6 [Qualification of Member] of RA 9904; and Section 4 of Resolution No. 770, Series of 2004)

Pursuant to Sec. 30, PD 957, it is very typically for developers to include in their contracts of sale a provision which stipulates that the buyer in a subdivision project automatically becomes a member of the homeowners’ association of the particular subdivision project. Or, the developer places such condition in the deed restriction annotated to the title of the property.

It must be emphasized that under Section 6 of RA 9904 “a homeowner…shall be qualified to be a member of an association.” All homeowners must first be qualified to become a member of the HOA. However, the presence of contract stipulation or provision in the deed restriction annotated to the title becomes the automatic qualification of the lot buyer to the HOA.

What does this all mean? Membership in a HOA is still voluntary under RA 9904 with certain exceptions, which are enumerated in Section 5 of HLURB Resolution No. 770, Series of 2004. Remember that membership in organizations or associations will forever be voluntary in nature by reason of the basic constitutional right to freedom of association enshrined in Section 8, Article III of the 1987 Constitution. But, the best evidence we have that memberships in a HOA is voluntary can be found in Section 22(a) of RA 9904. The law makes it unlawful for any person to compel a homeowner to join the association, without prejudice to the exceptions indicated in the said provision.

Now, what is interesting is that the exceptions mentioned in Resolution No. 770 does not really force an individual to maintain his/her membership in the HOA. Once you have been qualified to become a member then you may opt out as a member, just like what OG wants to do in her case. The next question is can OG opt out as a member of her HOA without fear of being denied the basic community services and facilities? YES, of course she can opt out as a member of her HOA similar to a person who can stop being a member of a labor union. But, unlike a non-union member who becomes “unprotected” and is denied certain benefits, a homeowner is assured his/her “right to enjoy the basic community services and facilities, provided that he/she pays the necessary fees and other pertinent charges.” (Section 5, RA 9904)

Section 5 assures all homeowners – both members and non-members – that they will not be denied the use and enjoyment of basic community services (like security, garbage collection and water service) and facilities (parks, playgrounds and other community facilities inside the subdivision) PROVIDED that they will pay the fees and charges determined by the HOA’s Board of Directors.

In Section 5 (c) of HLURB Resolution No. R-771, Series of 2004 (Rules on the Registration and Supervision of Homeowners Association) the powers and attribute of the HOA are those stated in its by-laws which include the following:

“(c) To impose and collect reasonable fees on members and non-member residents who avail of or benefit from the facilities and services of the associaiton, to defray the necessary operational expenses, subject to the limitations and conditions imposed under the law, regulations of the Board and the association by-laws;” (underscoring mine for emphasis)

So it is quite clear that the HLURB allows for the presences of non-member residents in a subdivision’s HOA. But, in my experience the fees and charges collected by the HOA are levied on both members and non-members alike. If ever there will be a dichotomy of fees and charges to be collected then I would suppose that the members will have lower and discounted rates vis-a-vis with the fees and charges imposed on non-members. This is but natural in order to encourage membership in the HOA and to show that there are extra benefits when one is a member.

Without the IRR in place then there is still no clear cut guideline on what has been discussed above, especially opting out of the membership of a HOA. As far as I know, there are no existing guidelines issued by the HLURB that tackles this matter. But, it is safe to say that the nature of the membership will always be voluntary. Because to be otherwise would violate the Bill of Rights, as mentioned earlier.

Hence, if you are disgusted and totally dissatisfied with the officials of your HOA then you have the choice to become disassociated or opt out of the membership. Or, you could become involve and try to make right the things that are being done wrong by the current officials of the HOA.

We must recall that HOAs are mandated to be formed for the purpose of promoting and protecting their mutual interest and assist in their community development. The same theme is embodied in the Declaration of Policy (Section 2) of RA 9904. No man is an island. Therefore, it is best to be involved in community affairs. Do your part, however, small or minute it may be to improve your community.

If our first choice when faced with adversity, poor governance, and mismanagement is to opt out of our membership in a HOA, then what does it say about our choice when it comes to our country?

Think about it…

Next time, we will discuss the concept of “ratification” as used in corporations and specifically, by the Board of Directors of a HOA.

Almost a month ago, Republic Act No. 9904(An Act Providing for a Magna Carta for Homeowners and Homeowners’ Associations, and for Other Purposes) was signed by the President.

RA 9904 was designed to be the vehicle to bring peace and comfortable living conditions in many communities. This is according to Senate Majority Floor Leader Juan Miguel Zubiri. He said that this law will benefit all homeowners from the different socio-economic classes. It was made sure that the benefits will be encompassing. Sen. Zubiri further said that the Magna Carta would “hopefully put an end to the confusion on where to register homeowners’ associations.”

Under RA 9904, every association of homeowners shall be required to register with the Housing and Land Use Regulatory Board (HLURB). This registration shall serve to grant juridical personality to all such associations that have not previously acquired the same by operation of the General Corporation Law or by any other general law.

In addition, the existence of associations previously registered with the Home Insurance Guarantee Corporation or the SEC shall be respected, and the said associations shall not be charged a penalty when they register with the HLURB after RA 9904 takes effect.

As Realtors, I think that we should be well-versed with new laws that affect our clients who want to purchase properties in gated communities – be they high-end or low-end subdivision projects – so that we could give them ample and educated advise should they ask our opinions about it.